Total gross compensation is the amount an employee receives before any deductions or adjustments. Unlike gross salary, which is the earned hourly or annual wages before deductions, total gross compensation includes tips, bonuses and other benefits employers give employees during the period being reported. This information gives government agencies an accurate picture of the employee's taxable income.

Payment and Benefits

In addition to wages, some employees receive benefits such as housing, stock options, 401k or other retirement contributions paid by an employer, performance or holiday bonuses, employer-paid health care or payments for unused vacation time. All these types of income are part of an employee's total compensation package and may need to be reported to state or federal agencies as part of each employee's income.

State Variations

Contact your state's department of revenue or treasury department if you aren't sure what to include in your total gross compensation calculations. Some states exclude certain items from total gross compensation, such as retirement or medical account contributions. For example, Texas includes employer contributions to the state's retirement plan under total gross compensation. Massachusetts does not include employer contributions to employee medical savings accounts. A local certified tax adviser can help you determine which items to include if you have trouble contacting your state's department of revenue.

Example

If you have an employee who earns $40,000 per year, that $40,000 is her gross annual salary, but it is not her gross total compensation unless she receives no additional pay or benefits. If you pay out $120 per month for her medical insurance, a $500 quarterly bonus and a $100 monthly meal card for your organization's cafeteria, that employee's total gross compensation is $44,640 for the year.

Special Expenses

Employer-paid moving expenses are counted as total gross compensation in most cases, for both state and federal purposes. Check with your state about any other less common forms of compensation, such as educational assistance. The guidelines for this can vary according to whether you directly pay a third party, such as a school, or you simply reimburse an employee's tuition.

About the Author

Anne Hirsh has been writing and editing for over 10 years. She has hands-on experience in cooking, visual arts and theater as well as writing experience covering wellness and animal-related topics. She also has extensive research experience in marketing, small business, Web development and SEO. Hirsh has a bachelor's degree in technical theater and English and post-baccalaureate training in writing and computer software.